The British competition authority blocked the merger of Activision Blizzard and Microsoft. Acti-CEO Bobby Kotick etches against the authority, but they don’t put up with it.
The biggest topic in gaming at the moment is the planned takeover of Activision Blizzard by the US group Microsoft – almost 70 billion US dollars are to flow.
But the major competition authorities in the USA, Great Britain and the EU sounded the alarm – with such large deals they first wanted to check whether the takeover would endanger any markets. They want to prevent a monopoly from emerging. The authorities even have the power to block such deals.
That’s what happened: the British competition authority CMA (Competition and Markets Authority) opposed the takeover and explained it with the cloud gaming sector. Activision Blizzard lost a good $7 billion in value in 31 minutes.
Microsoft and Activision Blizzard immediately made it clear that they are sticking to the deal. Acti-CEO Bobby Kotick even found quite clear words and accused the authority CMA of incompetence. CMA boss Sarah Cardell didn’t let that sit on her, shot back and gave insights into the decision.
Activision CEO Says Authority Doesn’t Understand Business
What did Kotick say? In an interview with the US media CNBC, the CEO of Activision Blizzard directed unusually strong words against the UK competition authority:
[…] And what it demonstrated to us is that these regulators, they don’t really understand our business. And so, they’re making determinations and judgments that are not factually correct, and I think when you go to the tribunal, that’s what you have to focus on is whether it was irrational.
[…] And it showed us that these regulators don’t really understand our business. And so they make statements and judgments that are factually incorrect and I think when you go to court you have to focus on whether it was irrational or not.
The CEO of Activision Blizzard is assuming that the authorities lack the competence to make a correct and rational decision in this case.
As the interview continues, it becomes clear that Kotick is referring less to the cloud market, the reason for the blockade of the CMA. Kotick rather draws comparisons that as an independent group you can compete globally with giants like Tencent and as a team with Microsoft you can do better.
Authority says: Deal would prevent innovation and competition
What did Cardell say? The head of the CMA clarifies that the decision is based solely on the cloud gaming market in Great Britain. Apparently she didn’t want to let Kotick’s spell sit on her. In an interview with Sky, Cardell said:
We know what we’re doing and we’ve done a very thorough investigation. The investigation lasted 6 months and we carefully examined all the details. We have concluded that to ensure that other competitors can effectively compete in a market that is growing and evolving, it is best to leave this market open to competition.
Source: Sky News
There are observers of the case, for example, who criticize that the cloud gaming market is still far too small to use it as a reason to block the takeover.
Cardell replies that the future and current market dynamics played a major role in this. The number of cloud gaming users has tripled over the last few years and that is an important signal that this market must be protected from too strong competitors.
Cardell notes that Microsoft already has a strong position in cloud gaming through the Windows operating system, the ecosystem surrounding Xbox and Microsoft’s past successes in the cloud gaming market. This could lead to preventing offers and innovations from competitors.
Activision Blizzard’s gaming portfolio would further strengthen this position and therefore the deal was blocked.
It is currently difficult to predict what impact the CMA’s decision will have on the planned merger. Experts are currently talking about everything from “could continue in a few months” to “must not start a new attempt for 10 years”.
One thing is certain: the merger has become a lot more complicated as a result.
If you have any questions or an opinion on the topic, leave a comment. If you would rather read more about the gaming market, take a look here: Why have hardly any good new MMORPGs been released in the last 9 years?
The contribution CEO of Activision Blizzard assumes UK authority incompetence – they shoot back: “We know what we are doing” first appeared on Mein-MMO.de.